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Tuesday, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
 COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case so far. The Chinese have been importing record volumes of iron ore throughout the year, taking advantage of softening prices, which touched their lowest level in five years a few days ago. Firm supply from Brazil and Australia has also supported this trend. Both producers, with a combined global market share of over 70%, have been steadily increasing their production post 2000, mainly guided by the mandate of accelerating Chinese appetite.
The boom of economic development in China has in turn made the country “the gift that keeps on giving” for mineral exporters across the globe. Big iron ore producers have been speeding up their sup-ply post 2000, mainly relying on what seemed as a race by China to match its infrastructure with its growth, but somewhere along the lines the fact that the gradual westernization of China, would at some point translate into deceleration of steel consumption was probably overlooked by the market, which brings us to today.
The growth of steel consumption in the country turned red for the first time in over two decades. The slowdown in property construction has quickly curbed the domestic need for steel and consequent-ly iron ore to a significant degree, which translated to excess production of steel as well as increasing iron ore stockpiles. In turn prices for both commodities started sliding, kick starting a vicious cycle of downward pressure.
From one hand, iron ore production was not tamed by the big ex-porters in order to support prices. As big miners in both Australia and Brazil have designed their production capacity around an economy of scale model, cutting down their production to match softening demand growth has not been an option to them, while this also gave them the means to start squeezing the bottom line of their Chinese competitors. At the same time, the Chinese themselves remained buyers of iron ore, enticed by the new attractive price levels they have long desired, with local steel producers remaining active de-spite the fact that domestic demand had started to scale back significantly. That led to surging exports, with cheap Chinese steel flooding the markets, further weighing on global prices.
In both iron ore and steel markets the prospects remain dim, with no evidence suggesting that a reversal is imminent. November was the second lowest month of the year in terms of Chinese iron ore imports, while the country’s exports of steel surged to a record high. Exhausting the stallion of the developing economies in the “becoming a developed country” race, means that in the not so distant future, China could see its growing appetite for growth linked commodities squeezed further. It is often said lately that India or other developing economies could step up to fill in the demand gap created by China, but let’s not forget that history doesn’t always repeat itself.
The truth is that the world in which China emerged as the big economy it currently is, is a very different place today. Developing economies nowadays cannot rely on developed ones to accelerate their growth in the same degree they used to, as most of the latter still struggle themselves with ailing growth, while at the same time and even most importantly, the belief that free trade is always affected during periods of economic crisis is becoming more evident these days. India has persistently tried to promote the “Make in India” and although the policy has met little success so far, Prime Minister Modi has made the idea of stop relying on imports for some of the most important commodities and start using domestic reserves, his personal goal.
My opinion is that more countries will try to protect their domestic production amidst evidence that the path out of the economic crisis now appears longer than what we originally thought it would be. In doing so, they will have to allow for ample room for protectionism measures to be applied, setting limits on quantity and/or price of imports, in order to support domestic production instead, which is exactly the opposite of what the extrovert in nature shipping industry needs.
Eva Tzima
Research Analyst
Compiled by:
Intermodal Research & Valuations
About the Author
Eva Tzima has experience of more than a decade as a financial analyst and has focused on the shipping industry through private equity projects as well as maritime stock analysis. Since 2012 she has been working as a Research analyst at Intermodal Shipbrokers Co., where she currently holds the position of Head of Research, focusing in the specific analysis of the SnP, Newbuilding and Demolition markets across the Dry Bulk, Tanker, Container and Gas Carrier sectors.
Previous to her current post she worked as an investment manager for a privately owned portfolio and in Trafalgar Asset Managers Ltd in London, mainly focusing in Private Equity Projects in the shipping, energy and aircraft sectors, as well as in Primary and Secondary Debt investments. During her employment in Trafalgar she acted as a director across a number of boards of entities affiliated to Trafalgar.
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Sunday, 14 September 14
FREIGHT RATES RALLY AS DEMAND INCREASED
COALspot.com: The Baltic Dry Index (BDI) is a number (in US$) issued daily by the London-based Baltic Exchange up 2.25 percent week on week. BDI cl ...
Friday, 12 September 14
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 673.3 MMST, SAYS EIA
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
Thursday, 11 September 14
THE PANAMAX MARKET IS TAKING A BREATHER - FEARNLEYS
Handy
We have experienced more activity in both hemispheres this week, said Fearnleys in this week's weekly report.
"We see rates c ...
Wednesday, 10 September 14
ARE GREEK BANKS ON THE VERGE TO START LENDING AGAIN? - JOHN N. COTZIAS
It is well known that Greek Banks had suffered severely after the economic crisis of 2008. From that period onwards, major changes have occur ...
Tuesday, 09 September 14
WEAK M&A DESPITE ABUNDANT DISTRESSED INDONESIA COAL ASSETS - FITCH RATINGS
COALspot.com: Fitch Ratings says that a meaningful level of merger and acquisition (M&A) activity leading to a consolidation of the coal sector ...
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- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Salva Resources Pvt Ltd - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Australian Coal Association
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- The University of Queensland
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
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